Health Care REIT Inc. (HCN) disclosed notes offering to reduce its debt level. In particular, the company priced 4.50% senior unsecured notes worth £500 million at 98.843% of the principal amount. The notes, due 2034, have a yield-to-maturity of 4.538%. The offering of the notes is anticipated to close on Nov 25, 2014.
Health Care REIT plans to utilize the reaped proceeds from this offering to pay-off the advances under its chief unsecured credit facility and meet other corporate needs such as acquisitions. Several renowned financial institutions such as The Royal Bank of Scotland Group plc (RBS), Wells Fargo Securities, LLC of Wells Fargo Company (WFC) and Deutsche Bank AG (DB) assisted Health Care REIT as joint book-running managers for the offering.
For Health Care REIT, the aforementioned notes offering is a strategic fit as it will lower debt and consequently the interest expenses. Also, the increased financial flexibility will enable the company to pursue its portfolio enhancement activity that will strengthen its top line. Notably, as of Sep 30, 2014, Health Care REIT’s cash and cash equivalents stood at $998.7 million, which was significantly up from $207.4 million as of Jun 30, 2014.
Earlier this month, Health Care REIT reported its third-quarter 2014 results. The company’snormalized funds from operations (:FFO) came in at $1.04 per share, which was a penny ahead of the Zacks Consensus Estimate and up 7 cents year over year. The 7% year-over-year increase in normalized FFO per share is primarily driven by same-store net operating income (:NOI) growth and notable portfolio investments in premium assets.
Health Care REIT currently carries a Zacks Rank #3 (Hold).
Note: FFO, a widely accepted and reported measure of the performance of REITs, is derived by adding depreciation, amortization and other non-cash expenses to net income
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